South Korean telecom giant Samsung Electronics Co expects to post a record operating profit of more than US$14 billion in the fourth quarter, boosted by huge demand for its memory chips, it said yesterday in an earnings preview.
The booming chip unit has helped the firm overcome a bribery scandal that saw its de facto head jailed and the embarrassing Galaxy Note 7 debacle.
Samsung estimated operating profits would hit 15.1 trillion won (US$14.1 billion) for October to December, nearly double the 9.2 trillion won posted a year earlier.
However, the figure was below analysts’ forecasts, which averaged 16.1 trillion won in a survey by Bloomberg News.
Full-year operating profit was projected at 53.6 trillion won — also a record.
Samsung was dealt a blow in August last year when Jay Y. Lee was jailed after being found guilty of bribery, perjury and other charges relating to payments made by Samsung to ousted South Korean president Park Geun-hye’s secret confidante. Lee is appealing his five-year sentence and says he is innocent.
That came after a damaging recall in 2016 of its flagship Galaxy Note 7 over exploding batteries, which cost Samsung billions of dollars and dealt a blow to its global reputation.
However, the travails have not impacted demand for Samsung Electronics’ products.
Fourth-quarter sales were projected to have jumped 23.8 percent year-on-year to 66 trillion won, with full-sales estimated at 239.6 trillion won.
The firm’s share price yesterday sank 3.11 percent to 2.52 million won in Seoul, with analysts raising concerns about the impact of a stronger won and lower chip prices
“The won-dollar exchange rate is worrisome,” Eugene Investment and Securities analyst Lee Seung-woo said in a report before the announcement, according to Bloomberg News.
However, HMC Investment Securities analyst Greg Roh said the figures were “satisfactory” despite missing estimates.
“I think Samsung overspent on marketing because it was the end of the year,” Roh said. “The first quarter for this year looks good for Samsung.”
Samsung is reportedly to roll out its new flagship smartphone, the Galaxy S9, next month, to compete with Apple Inc’s iPhone X.
Analysts say that the launch of the new model would boost the mobile division, which faces fierce competition from Apple and Chinese manufacturers.
Since the arrest of some of its top executives last year, the wider Samsung Group has dismantled its Future Strategy Office, the coordinating body that oversees major decisions such as acquisitions or entering new business.
The group described the move as a “reform plan,” which would allow each unit to run more independently in a transparent manner.
The company is set to release its final earnings report later this month.
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